Mumbai, Maharashtra, India
Financial results at a glance
Earnings
NII grew by 32% on YoY basis to Rs. 3,002 crore in Q2-FY23.
Net Interest Margin improved by 15 bps on YoY basis to 5.98% in Q2-FY23.
Fee and Other Income grew by 44% YoY to Rs. 945 crore in Q2-FY23.
Core operating income (excl. trading gains) grew by 35% YoY to Rs. 3,947 crore in Q2-FY23
Core operating profit (excl. trading gains) grew by 84% YoY to Rs. 1,052 crore in Q2-FY23
Provisions were lower by 11% YoY basis at Rs. 424 crore in Q2-FY23 at 1.2% (annualized) of average funded assets.
Net Profit grew by 266% on YoY basis to Rs. 556 crore in Q2-FY23.
ROA (annualized) reached 1.07% and ROE (annualized) reached 10.13% in Q2-FY23
Deposits
Customer Deposits grew by 36% YoY to Rs. 1,14,004 crore.
CASA Deposits grew by 37% YoY to Rs. 63,305 crore.
CASA ratio was at 51.28% as of September 30, 2022.
Assets
Funded Assets grew by 25% YoY to Rs. 1,45,362 crore.
Retail Loan and Commercial loans grew by 40% YoY to Rs. 1,09,669 crore, of which Home Loans grew by 59% YoY
Corporate Book (Non-Infrastructure) grew by 20% on YoY basis to Rs. 24,883 crore.
Infrastructure Financing reduced by 41% YoY to Rs. 5,992 crore (4.1% of funded assets)
Asset Quality
GNPA and NNPA of the Bank was at 3.18% and 1.09% respectively, QoQ improvement by 18 bps and 21 bps respectively.
GNPA and NNPA of the Retail and Commercial Finance book was at 2.03% and 0.73% respectively, QoQ improvement by 8 bps and 20 bps respectively.
Provision Coverage Ratio (PCR) including technical write-off for the Bank is now increased to 83% (excluding the run-down infrastructure book) as compared to 69% at Sep-21.
Capital Adequacy & Liquidity
The Board of Directors of IDFC FIRST Bank, in its meeting held today, approved the unaudited financial results for the quarter and the half year ended September 30, 2022.
Detailed note On Business & Financial performance of the Bank
Earnings
Profitability: The net profit for Q2-FY23 grew to Rs. 556 crore from Rs. 152 crore in Q2-FY22 (up 266% YoY) and from net profit of Rs. 474 crore in Q1-FY23 (up 17% QoQ), driven by strong growth in core operating income. For H1-FY23, net profit grew to Rs. 1,030 crore as compared to net loss of Rs. 478 crore in H1 FY22.
Net Interest Income (NII): NII grew by 32% YoY to Rs. 3,002 crore in Q2-FY23, up from Rs. 2,272 crore in Q2-FY22. For H1-FY23, NII grew by 29% YoY to Rs. 5,753 crore as compared to Rs. 4,457 crore in H1-FY22.
Net Interest Margin (NIM%): NIM% (quarterly annualized) of the Bank was at 5.98% for Q2- FY23 compared to 5.83% in Q2-FY22 and 5.89% in Q1-FY23.
Fee and Other Income increased strongly by 44% YoY to Rs. 945 crore in Q2-FY23 from Rs. 658 crore in Q2-FY22. For H1-FY23, it grew by 67% YoY to Rs. 1,844 crore from Rs. 1,107 crore in H1-FY22.
Core operating income (NII + fee and other income excluding trading gains) increased by 35% YoY to Rs. 3,947 crore in Q2-FY23 from Rs. 2,930 crore in Q2-FY22 aided by strong NII and Fee income growth.
Fee Income growth was contributed primarily by the fees related to loan sourcing, higher transaction led fees, distribution and wealth management fees etc. Retail fees (including toll and credit card) constitutes 92% of the overall fees for the quarter.
Operating Expense grew 23% YoY to Rs. 2,895 crore in Q2-FY23 from Rs. 2,359 crore in Q2- FY22. The increase on YoY basis was relatively higher on account of higher disbursals in Q2 FY23 and low base affect in Q2 FY22 due to impact of COVID-19 second wave.
Core Operating Profit (excluding trading gains) grew by 84% YoY basis to Rs. 1,052 crore for the quarter Q2-FY23 from Rs. 571 crore in Q2-FY22.
Provisions were lower by 11% on a YoY basis at Rs. 424 crore in Q2-FY23 as compared to Rs. 475 crore in Q2-FY22. The credit cost (quarterly annualized) as % of average funded assets for Q2-FY23 was 1.2%. For H1-FY23, the same was at 1.1%.
The Bank is well on track to meet the asset quality and credit cost guidance. Based on the improved portfolio performance indicators, the Bank is confident to achieve its FY23 credit cost guidance at lower than 1.5% of the total average funded assets.
Profitability Ratio:
The RoA (quarterly annualized) of the Bank increased to 1.07% in Q2-FY23 from 0.35% in Q2-FY22 and 0.97% in Q1-FY23.
The RoE (annualized) of the Bank improved to 10.13% in Q2-FY23 from 2.97% in Q2- FY22 and 8.96% in Q1-FY23.
Deposits
The Bank continues to strengthen its liability franchise with consistent growth in Deposits.
CASA Deposits grew by 37% YoY to Rs. 63,305 crore as on September 30, 2022, as compared to Rs. 46,269 crore as on September 30, 2021. It was contributed by 55% YoY growth in Current Accounts deposits and 34% YoY growth in Savings Accounts deposits.
CASA Ratio was at 51.28% as on September 30, 2022, as compared to 50.04% as on June 30, 2021 and as compared to 51.28% as on September 30, 2021. Average CASA Deposits grew by 32% YoY and by 13% QoQ.
Customer Deposits increased by 36% to Rs. 1,14,004 crores as of September 30, 2022, as compared to Rs. 83,889 crore as of September 30, 2021.
Branch & ATM Network: As on September 30, 2022, the Bank has 670 branches and 812 ATMs (including recyclers) across the country. The Bank has added 29 branches and 93 ATMs since March 31, 2022.
Funded Assets (Net of IBPC)
Funded assets increased by 25% YoY to Rs. 1,45,362 crore as on September 30, 2022 from Rs. 1,16,470 crore as on September 30, 2021.
A. Retail Funded Assets:
Retail funded book is highly diversified over multiple lines of businesses. The Retail funded book increased 41% YoY to Rs. 96,496 crore as on September 30, 2022 from Rs. 68,385 crore as on September 30, 2021.
Housing loans book grew by 59% YoY as of September 30, 2022.
Mortgage backed businesses grew 29% YoY as of September 30, 2022.
Rural Financing segment has grown by 34% YoY on the comparatively lower bases on the rural businesses which were impacted the most by COVID-19 second wave.
Bank has over 1.2 Mn Credit Cards issued since launch in Jan-21. The credit card portfolio outstanding as on September 30, 2022 stood at Rs. 2,706 crore which more than doubled from a low base on YOY basis. Most of our customers have been acquired by cross-selling to existing customers. Gross spends on Credit Card have increased by 23% sequentially.
Retail funded asset book constitutes 66% of overall funded asset book at September 30, 2022.
B. Commercial loans:
The Commercial loan Book of the Bank increased by 34% YoY to Rs. 13,173 crore as on September 30, 2022 from Rs. 9,865 crore as on September 30, 2021.
This book constitutes 9% of funded assets as on September 30, 2022. Most of the products in this segment are growing from respective small bases.
C. Corporate (non-Infra) funded book increased by 20% YoY to Rs. 24,883 crore as on September 30, 2022 from Rs. 20,822 crore as on September 30, 2021. It increased by 4% on a sequential basis.
D. Infrastructure Financing book reduced by 41% on a YoY basis to Rs. 5,992 crore as on September 30, 2022 from Rs. 10,142 crore as on September 30, 2021. This portfolio now constitutes only 4.1% of total funded assets as on September 30, 2022 as compared to 8.7% as on September 30, 2021. The Bank will continue to run down this legacy infrastructure financing book.
Other Corporate Funded Assets (Security Receipts, Loans converted into Equity, PTC and RIDF) decreased by 34% YoY to Rs. 4,818 crore as on September 30, 2022 from Rs. 7,256 crore as on September 30, 2021.
Top 10 Borrowers concentration as % of total Funded Assets has reduced to 3.3% as on September 30, 2022 from 5.5% as on September 30, 2021.
Asset Quality
The overall Asset Quality has improved during the year. The following is the segment-wise Gross and Net NPA:
Particulars
Sep-21
Jun-22
Sep-22
QoQ Change (in bps)
YoY Change (in bps)
Retail & Commercial Loans
GNPA
3.45%
2.12%
2.03%
(8)
(142)
NNPA
1.66%
0.93%
0.73%
(20)
(93)
Corporate
GNPA
2.85%
3.67%
3.43%
(23)
58
NNPA
0.84%
0.20%
0.14%
(6)
(70)
Infrastructure
GNPA
15.83%
21.74%
24.48%
274*
865
NNPA
9.89%
11.82%
13.40%
158*
351
Total
GNPA
4.27%
3.36%
3.18%
(18)
(108)
NNPA
2.09%
1.30%
1.09%
(21)
(100)
Provision Coverage Ratio (%)
(Incl. Technical Write-offs)
63.00%
73.13%
76.49%
336
1,349
*No new case was added during the quarter. This is due to the book ramp-down.
The Bank continues to improve on asset quality on overall basis. The NPA levels in the retail and commercial segment have improved and are around the long-term guidance provided earlier of GNPA 2% and NNPA of less than 1%.
One infrastructure loan (Mumbai Toll Road account) which become NPA during Q1 FY22, continued to pay its dues partially and the principal outstanding reduced by Rs. 21 crore during the quarter to Rs. 760 crore as on September 30, 2022. While the account is NPA as of now, we expect to collect our dues and expect eventual losses on this account to be not material in due course.
Excluding the NPA in the infrastructure financing book which will run down in due course, the Gross and Net NPA of the Bank would have been 2.27% and 0.63% and the PCR including technical write off would be 83.31%.
The standard restructured book stood at 1.0% as on September 30, 2022 of the funded assets as against 1.3% as on June 30, 2022.
Capital and Liquidity Position
Capital Adequacy of the Bank was strong at 15.35% with CET-1 Ratio at 13.67% as on September 30, 2022.
Average LCR was strong at 131% for the quarter ending on September 30, 2022.
Comments from Managing Director and CEO
Mr. V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank, said, “We have built a strong foundation at the bank over the past three years. This includes a strong retail liabilities franchise with strong CASA ratio of 50% and great service standards. Our philosophy of ethical banking and high levels of corporate governance are also our pillars. I believe we can grow from here on in a stable manner.”
“Our profit after tax has grown consistently for the 5th consecutive quarter, reflecting the resilience of our franchise. I am happy to share that we have posted the highest-ever profit in the history of the Bank this quarter at Rs. 556 crore, driven by strong growth in core operating income. We are confident of sustaining this trend as the new lines of businesses launched, such as cash management, wealth management, FASTag, credit cards, are at the start of the journey and have immense potential going forward.”
“On the asset quality front, we have a long track record of 12 years of maintaining our retail gross NPA and net NPA at around 2% and 1% respectively through the economic slowdown in 2010-2014, Demonetisation in 2016, GST implementation in 2017, and ILFS crisis in 2018-19. I am happy to share that even after COVID, the retail asset quality has reverted to long term sustainable levels with GNPA of 2.03% and NNPA of 0.73% as of September 30, 2022.”
Going forward, we are optimistic about maintaining our growth momentum on the basis of strong foundations we have built at the Bank.
About IDFC FIRST Bank
IDFC First Bank was formed by the merger of erstwhile IDFC Bank, promoted by renowned infrastructure financing institution IDFC Ltd. and leading technology NBFC, Capital First. The bank believes in making customer-first products, and was the first universal bank to offer monthly interest credit on savings accounts, first bank to issue life-time free credit cards with no minimum spend conditions, first bank to offer dynamic and low APR rates, evergreen rewards points, and many other such interesting products.
The Bank’s vision is to build a world class bank in India, guided by ethics, powered by technology, and to be a force for social good. Our mission is to touch the lives of millions of Indians in a positive way by providing them high-quality banking services.
IDFC FIRST Bank, has a balance sheet of Rs. 2,12,776 crore, and has provided over 30 million loans in its combined history and serves customers in over 60,000 villages, cities and towns across the length and breadth of the country.
In a short time, the Bank has expanded to 670 branches, 249 asset service centres, 812 ATMs and 606 rural business correspondent centres across the country, a next-generation net and mobile banking platform and 24/7 Customer Care services. IDFC FIRST Bank is committed to bring high-quality banking at affordable rates to India. The Bank also offers high quality technology-enabled corporate banking solutions, contemporary cash management solutions, fleet card and FASTag solutions and wealth management solutions.
To view IDFC FIRST Bank Results, click here.
Cautionary Statement
“Statements made in this release may contain certain forward-looking statements based on various assumptions on the Bank’s present and future business strategies and the environment in which it operates. Actual results may differ substantially or materially from those expressed or implied due to risk and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India and abroad, volatility in interest rates and in the securities market, new regulations and Government policies that may impact the Bank’s businesses as well as the ability to implement its strategies. The information contained herein is as of the date referenced and the Bank does not undertake any obligation to update these statements. The Bank has obtained all market data and other information from sources believed to be reliable or its internal estimates, although its accuracy or completeness cannot be guaranteed.”
